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Independent Reviews for Venture Investors

CBLU.V - To be rerated.


Clear Blue Technologies Intl Inc. (CBLU.V) delivers clean, managed, “wireless power” to meet the need for reliable, low-cost, solar and hybrid power for lighting, telecom, security, IoT devices, and other mission-critical systems.


The company offers a number of innovative products: Solar Controller, Solar and Wind Controller, Telecom Power Pack, Illuminence Cloud Control, Nano-Grid Power Pack, and IOT solutions.


Previous coverage was issued on May 2019, February 2020, September 2020, and May 2021.


News releases


May 27 - Announces Q1 2021 Financial Results: Revenue of $3.45M, Gross Margin of 22%, Adjusted EBITDA of $(0.41M)


June 23 - Partners with Parallel Wireless to Bring Connectivity to Africa: Parallel Wireless, Inc., a U.S.-based Open RAN company, enabling ALL Gs. The partnership will use Clear Blue’s Smart Off-Grid power and Parallel Wireless’ leading OpenRAN technology to deploy a cost-effective solutions for a telecom operator in Africa. The partnership will involve a new Large-Scale Rollout with product shipments scheduled to begin in the next two quarters.


July 15 - Partner with Avanti Communications to deploy rural connectivity across sub-Saharan Africa: Avanti, a leading provider of high throughput satellite capacity across EMEA. Within the next three to five years, the partnership is expected to deliver mobile network coverage to 400 million people.


Avanti’s rural network coverage solution supports 2G, 3G, 4G and Wi-Fi connectivity across Africa. As part of this joint rural deployment effort, Avanti will provide critical, high throughput Ka-band satellite connectivity and VSAT equipment. Clear Blue will deploy its smart off-grid solar-powered solutions with remote management and control.


July 29 -Awarded Multi-Million Dollar Contract by NuRAN: Contract value estimated at $8m-$10m+ CAD in revenue for over the next three years): Clear Blue’s 2021 third and fourth-quarter earnings will reflect initial sales numbers for the contract, but the Company is providing estimated pro forma revenues for its shareholders in this release.


1) NuRAN awarded Clear Blue the contract to power an estimated minimum of 1,333 telecom sites in the Democratic Republic of the Congo (DRC) 2) Clear Blue’s first order will realize $750,000 of revenues, in the remainder of 2021, with the initial orders due to start shipping in July; 3) Clear Blue estimates approx. $2.5 million per year in revenues between 2022 – 2025, totaling a minimum additional $7.5 million; 4) The contract includes Energy-as-a-Service, which will provide additional minimum recurring revenues of $100,000 per year, contracted for a minimum of three years.


Aug. 19 - Collaborates with Facebook Research and Mayu Telecomunicaciones on Rural Telecom Field Study: Project SEISMIC (Smart Energy Infrastructure for Mobile Internet Connectivity), an initiative with Facebook Research and Mayu Telecomunicaciones (“Mayutel”) that aims to help accelerate rural telecom infrastructure.


By collecting field study data, the project aims to validate that telecom sites powered by smart off-grid power can achieve significantly lower capital expenditures, reduce site power consumption, and minimize operating costs.


The field study is currently underway in Peru. Mayutel, the first rural mobile infrastructure operator in Peru, built the SEISMIC telecom test sites, while Clear Blue provided smart power technology using a power management module, software, and cloud service to enable dynamic power management.


Data collection and field testing began earlier this year, with plans to publish initial findings in 6-9 months. The project intends to validate a smart power management solution that could offer significant savings in power costs between 40 to 60 percent, while still maintaining relevant telecom performance


Aug. 26 - Announces 2021 Q2 Financial Results: The second quarter of 2021 saw a meaningful increase in Clear Blue’s revenues compared to the same period in 2020. Much of that revenue can be attributed to new contracts with telecom infrastructure operators in Africa, which the Company recognizes as an important vertical for continued growth.


Sep. 13 - Engages Sophic Capital for Capital Markets Advisory, Announces RSU and Option Grants: Clear Blue’s engagement with Sophic Capital is a 12-month term, on a fee-for-services basis of CAD$8,000 per month.


In addition, Clear Blue has granted Sophic 650,000 options to purchase Clear Blue shares at a price of $0.30 per share. The options will vest in equal amounts of 162,500 each quarter over 12 months.


Clear Blue further announces that the Board of Directors has approved the grant of 1,239,053 RSUs to officers and directors, with 1,055,303 vesting on December 31st 2021 and the balance of 183,750 vesting annually over 3 years.


Sep. 24 - Named One of Canada’s Top Growing Companies by The Globe and Mail: Featured on the 2021 Report on Business ranking of Canada’s Top Growing Companies by The Globe and Mail. Canada’s Top Growing Companies ranks Canadian companies on three-year revenue growth. CBLU.V earned its spot with a three-year growth of 75%.


Oct. 29 - Close Converted Debentures Financing: Completed a private placement offering of convertible unsecured subordinated debentures for gross proceeds of C$1,535,000. The Company may complete additional tranches of the Offering for cumulative gross proceeds of up to $4 million.


The Debentures will bear interest from each applicable issuance date at 10% per annum, calculated and paid semi-annually on the last day of June and December of each year. The first interest payment will be made on June 30, 2022 and will consist of interest accrued from and including the closing of each tranche of the Offering to June 30, 2022.


Each unit will be comprised of: (i) one common share of the Company (each, a "Common Share"); and (ii) one-half of one Common Share purchase warrant (each whole warrant, a "Warrant"). Each Warrant will be exercisable to acquire one Common Share at an exercise price of $0.60 per Common Share, subject to adjustment in certain events.


Nov. 9 - Report Third Quarter 2021 Financial Results and Host Conference Call on Tuesday, November 16, 2021


Nov. 15 - Closes Convertible Debenture Financing, exceeding funding goals: Closed the second (and final) tranche of a previously announced private placement offering of convertible unsecured subordinated debentures for gross proceeds of C$2,899,000. With the second tranche completed, and cumulative gross proceeds of C$4,434,000.


The principal amount of the Debentures will be convertible into units of the Company (the "Units") at the option of the holder at any time prior to the close of business on the last business day immediately preceding the Maturity Date, at a conversion price of $0.40 per Unit (the "Conversion Price"), subject to adjustment in certain events


Nov. 16 - Reports 139% Year-Over-Year Revenue Growth in Q3 2021 and Provides Updated Outlook: i) Customer planning for Telecom system rollouts and Illumient construction planning for 2022 is very active providing strong indications to a very strong start to 2022 and resulting in upgrades to our internal volume forecasting for the first two quarters of 2022;


Jan. 7 - Provides Update to Convertible Debenture Financing and Engages Firm to Drive Social Media Engagement: Announces an adjustment to the previously announced issuance of convertible unsecured subordinated debentures in 2021. The Company completed a private placement offering of convertible unsecured subordinated debentures for gross proceeds of C$2,799,000. With the second tranche completed, and cumulative gross proceeds of C$4,334,000 , the Company still exceeded the cumulative funding target of C$4 million, previously announced on October 29, 2021


The Company also wishes to announce that it has signed a contract with Triomphe Holdings Ltd., the parent company of Capital Analytica, for ongoing social media consultation.


Feb. 3 - YahClick Selects Clear Blue Technologies’ Smart Off-Grid Solar Power Systems for Africa: YahClick, leading satellite broadband service provider, has selected Clear Blue as its preferred Smart Off-Grid, solar power system provider for large deployments of its telecommunication customer sites across Africa.


Initial orders worth $425,000 in revenue, from two YahClick customers, across 44 sites commenced shipping in Q4 2021. Follow-on shipments for these and other YahClick customers are expected throughout 2022, beginning in Q1. Initial installations under this partnership will begin in early 2022 for sites in Nigeria and Zambia, with an estimated target of close to 1,000 sites to be installed over the next 12 to 24 months.


Initial system sales are expected to generate gross margins in line with the Company’s historical average. These orders were not included in Clear Blue’s Q3 bookings of $2.9 million but are expected to be included in Q4 2021 results. The initial orders across 44 sites totaling $425,000 in revenue are expected to have an estimated $225,000 of additional ongoing revenue, representing a total estimated 5-year lifetime contract value of $650,000.



Summary


Partners

Three partnerships releases: Parrallel Wireless, Avanti Communications, & Facebook Research+Mayu Telecom.


A partnership with Parallel Wireless an Open RAN provider was struck (June 2021). The partnership will involve a new Large-Scale Rollout with product shipments scheduled to begin at the time: "in the next two quarters".


Another was formed in July 2021 with Avanti Communications who's provider of high throughput satellite capacity across EMEA. Avanti will provide critical, high throughput Ka-band satellite connectivity and VSAT equipments.


Of note, as per Avanti new release: Within the next three to five years, the partnership is expected to deliver mobile network coverage to 400 million people that cannot access mobile broadband services.


Finally in August 2021, Facebook Research and Mayu Telecom partnered with Clear Blue on Project SEISMIC (Smart Energy Infrastructure for Mobile Internet Connectivity) with the aim to validate that telecom sites powered by smart off-grid power can yield significantly lower capital expenditures, site power consumption, minimize operating costs.


Data collection and field testing began in early 2021, with plans to publish initial findings in 6-9 months. As such,results could be produced anytime between February and May 2022. This could represent a significant catalyst for Clear Blue.


Contracts

Two major contracts were disclosed one with NuRan Wireless and another with YahClick.


A contract of an estimated value of $8M-$10M CAD over the next three years (roughly $2.5M per annum) from NuRAN Wireless was received in July 2021. The engagement to power an estimated minimum of 1,333 telecom sites in the Democratic Republic of the Congo (DRC). Also, an additional $0.1M/per annum in recurring revenue is expected.


Today, YahClick selected Clear Blue for large deployments of its telecommunication customer sites across Africa. An initial orders of $0.42M was received for a total estimated value of $0.65M over five years for 44 sites. More orders of this kind are expected in throughout 2022, for an estimate of up to 1000 sites in the next 12 to 24 months.


Appointments

Sophic Capital (September 2021) for a 12 month engagement. Terms: $8000 monthly for capital markets advisory.In addition, Sophic was also granted 650,000 options to purchase Clear Blue shares at a price of $0.30 per shares.


Triomphe Holdings (January 2022), the parent company of Capital Analytica, for ongoing social media consultation.


Financing

October 2021, CBLU.V closed a Converted Debenture Financing for $1.5M up to $4M at $0.40 cents (Warrant $0.60 cents). Terms were a 10% per annum paid semi-annually with first payment begining June 30 2022. One month later, the final tranche of C$2,899,000 was closed. With the second tranche completed, and cumulative gross proceeds of C$4,434,000. This number was readjusted slightly downward to C$4,334,000 last month.


RSU and Option Grant

September 2021, Clear Blue approved the grant of 1,239,053 RSUs to officers and directors, with 1,055,303 vesting on December 31st 2021 and the balance of 183,750 vesting annually over 3 years.

Earnings

Year to Date (YTD) 2021 revenues are four fold YTD FY 2020 and are already 50% higher than the FY 2020 at $6.51M. Furthermore, YTD 2021 Net Losses ($2M) are lower than FY 2020 (3.82M) and much lower than YTD 2020 (2.4M).

YTD 2021 Bookings has been steady and north of $2.3M.


In short

CBLU.V continues to grow its revenues through a diversified eco-system of partners (NuRan Wireless, Parralel Wireless, Avanti Communication, Facebook Research+Mayu Telecom, and YahClick amonst many others). In fact, Clear Blue is on track for a third consecutive year of revenue increase and yet it closed today at $0.25 cents! In addition, the company is able to contain its Net Losses as it scales its business. Net loss have been declining yearly since FY 2018.


Moreover, the amount of warrant outstanding and exercisable as of September 30, 2021, appeared relatively manageable with less than 1M below $0.40 cents. As depicted below, the majority have an exercise price of $0.50 cents.



Although the last financing involved a Convertible Debenture of $0.40 cents (Warrant at 0.60 cents), its still quite a gap from the current valuation level. As a result, it's difficult to understand the existing multiple assigned to the company.


This is no doubt why CBLU.V has ramped up its marketing and promotions via Sophic Capital and Triomphe Holdings.


Perhaps the only caveat for the company is the absence of a synergistic accretive acquisition since it has become public. This would significantly impact its growth outlook and perception with the market.


Regardless, at this juncture Clear Blue is likely due to be rerated.

DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.

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